Dec 10 - Fitch Ratings has affirmed HSBC Bank Middle East's (HBME) Long-term
Issuer Default Ratings (IDR) at 'AA-' and HSBC Bank Oman's (HBON) Long-term IDR
at 'A+'. The Outlooks are Stable. The rating actions follow the downgrade of the
banks' ultimate parent, HSBC Holdings plc (see 'Fitch Downgrades HSBC
to 'AA-'; Outlook Stable' dated 7 December at www.fitchratings.com). A full list
of rating actions is at the end of this rating action commentary.
RATING DRIVERS AND SENSITIVITIES- IDRs ANDSUPPORT RATING
HBME and HBON's IDRs and Support Ratings are driven by the extremely high
probability of support available to the bank from HSBC Holdings plc (HSBC or the
group). Fitch's opinion of support is based on the ability and willingness of
HSBC to support its subsidiary banks, if ever required, given their overall
importance to the group.
Fitch believes that HBME (100% indirectly owned by HSBC) is core to the group's
international banking strategy in light of which a default of a core subsidiary
would have significant reputational issues for HSBC. The agency has therefore
equalised HBME's Long-term IDR with HSBC's at 'AA-'. Other factors considered
include HBME's unique regional position and high level of strategic and
operational integration, specifically in its business franchise, risk
management, and liquidity and capital management policies.
Fitch considers HBON a strategically important subsidiary of HSBC, given its
relative size, 51% ownership and it being less aligned with the group.
Therefore, HBON's Long-term IDR is one notch lower at 'A+'.
The IDRs of both banks are, therefore, sensitive to changes in HSBC's IDRs.
Fitch has not reviewed the Viability Ratings of either HBME or HBON, which are
unaffected by today's action.
Established in 1959 and operating out of Dubai, HBME is HSBC's main vehicle for
its Gulf/Middle Eastern operations. The bank has a presence in 13 countries in
the region through a wide network of branches and affiliates. HBON was created
in June 2012 following the merger of Oman International Bank and HBME's Oman
operations. The combined entity is 51% owned by HBME.
The rating actions are as follows:
HSBC Bank Middle East Limited
Long-term IDR affirmed at 'AA-'; Outlook Stable
Short-term IDR affirmed at 'F1+'
VR unaffected at 'bbb'
Support Rating affirmed at '1'
EMTN Programme: Senior unsecured debt affirmed at 'AA-' / 'F1+'
HBME Sukuk Company Limited
Trust Certificate Issuance Programme: Senior unsecured trust certificates
affirmed at 'AA-'
HSBC Bank Oman SAOG
Long-term IDR affirmed at 'A+'; Outlook Stable
Short-term IDR affirmed at 'F1'
VR unaffected at 'bb'
Support Rating affirmed at '1'
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Additional information is available at www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.
Applicable criteria, 'Global Financial Institutions Rating Criteria,' dated 15
August 2012 , 'Rating FI Subsidiaries and Holding Companies' dated 10 August
2012 and 'Rating Sukuk' dated 16 August 2012 are available at
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Rating FI Subsidiaries and Holding Companies
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FITCH AFFIRMS HSBC BANK MIDDLE EAST LIMITED & HSBC BANK OMAN SAOG; STABLE